Can John W Henry really save Liverpool FC?

"Some people think football is a matter of life or death. I assure you, it's much more serious than that." That famous quote, from Liverpool's most celebrated manager, Bill Shankly, took on extra resonance in the drama of last week's High Court penalty shoot-out for the club. Some have hailed the victor hedge-funder John W Henry as Liverpool's "knight in a shiny suit", observes The Daily Telegraph. But has the fallen giant of English football merely swapped one set of rapacious American owners for another financier cast in the same mould?

Henry's career bears some resemblance to that of the ousted co-owners, Tom Hicks and George Gillett. They borrowed to buy Liverpool for £220m in 2007 and took it to the brink of bankruptcy. Like Hicks, Henry made his money in hedge funds before branching into baseball club ownership. Yet in terms of running a successful franchise, they "inhabit different planets", says The Daily Telegraph. Henry, 61, has proved "a revelation" since his sports outfit, New England, bought the Boston Red Sox in 2002. Under his "scrupulous direction", a team thought to have been jinxed by "the curse of the Bambino" ever since its fateful decision to sell Babe Ruth to the New York Yankees in 1918, has won two World Series.

Actually, the big difference between Henry and his detested predecessors is that he's a genuine sports fan, says the FT. Raised on a farm in Arkansas, he spent his childhood calculating baseball percentages. Although quiet and reserved, he has a rebellious streak, dropping out of a philosophy degree to play in rock bands and try his hand at blackjack in Las Vegas (he was soon evicted for counting cards).

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Henry put his innate mathematical prowess to better use on the family farm, hedging the commodity markets. "I just seemed to do fairly well trading by the seat of my pants." Over the next five years he refined a "dispassionate" trends-based system for playing the markets and, in 1981, launched his managed futures hedge fund, JWH. "Having risen to riches by funnelling a childhood love of baseball statistics, he then set about using his money to return to baseball."

When hedge-funders recall "the pioneers and the performers" of their industry, Henry's name "still resonates", notes SeekingAlpha.com. Over a quarter of a century, his long-term moves in bond and commodity markets made his investors $1.6bn. But it was often a white-knuckle ride. "Has the curse of the Bambino been transferred from the Sox to their owner?" asked a BusinessWeek headline in 2007, after a series of double-digit losses.

Yet JWH came out of the subsequent crash in better shape than many of its peers. An investing saw goes like this: "Buy Henry when he's down 20% and buy some more when he's down 40%, because there's a new high coming." That's certainly something for Liverpool fans to ponder.

What the Red Sox saviour has to do now

"Tom Hicks and George Gillett were about leverage. We are about winning," boasted Henry's partner at New England Sports Ventures, Tom Werner, soon after the Liverpool deal was finalised. It was a bad omen, then, that the next game a local derby against Everton was such a dismal performance, says Richard Williams in The Guardian. Fans had been buoyed by the talk of the Red Sox saviour. But the optimism proved "no more substantial than the dawn mist on the Mersey". The club, languishing at the bottom of the Premiership, remains in real trouble on the pitch.

"Like other football fans, Liverpudlians are famous for bar fights, urinating in public, and frequenting brothels just like their players," says the Miami New Times. How will "such a bunch of hooligans react to another damn Yank overlord"? Unless he treads carefully, Henry could be in for a deeply unpleasant time.

Yet he comes at Liverpool's problem "with an astonishing bench", says the FT. Fellow investors include Jeffrey Vinik, former manager of Fidelity's gargantuan Magellan Fund; and he can also deploy "the world's most influential business academic", Michael Porter, his strategy advisor at the Red Sox. Henry might not have an Abramovich-sized wallet, but he has shown "clear-eyed", savvy management in Boston, plus a respect for tradition. "If anyone can... put Liverpool back on their pedestal, it may be John Henry."

Henry has already won plaudits for reducing Liverpool's debt servicing burden from £25m a year to £2m-£3m. But there remain plenty of pressing challenges, observes The New York Times not least, dealing with Messrs Hicks and Gillett. Insisting they're the victims of an "epic swindle" and "organised conspiracy", they have vowed to fight on "with all their legal energies" to secure a claim for damages of $1.6bn. The saga at Anfield isn't over yet.